State Efforts to Counter NSA Surveillance are Misguided

A draconian legislative proposal in California threatens to undermine the freedom and flexibility of the state to acquire the best technologies available – many of which are created in California. SB 828, authored by state Sens. Ted Lieu (D) and Joel Anderson (R), proposes the overly restrictive "4th Amendment Protection Act." The bill prohibits companies contracting with federal agencies that collect data on individuals from doing business with the state. The bill also imposes funding restrictions on contractors that conduct business with any federal agency that collects electronic data on individuals. We at the IT Alliance for Public Sector (ITAPS) have expressed our grave concerns about SB 828 in a letter that can be found here.

One such concern is that while the Snowden revelations have called attention to data collection by the National Security Agency (NSA), many other federal agencies that collect electronic data about individuals would be affected such as the Social Security Administration, the Department of Agriculture’s SNAP (food stamp) program, and the Census Bureau. More importantly, the loose definitions and vague terminology in the proposal raise concerns that corporations doing business with the state or any of these federal agencies could see their contract funding and opportunities shut off in California. What’s worse is that we’ve seen a number of copycat state legislative proposals based on this model in Alaska, Arizona, Maryland, Mississippi, Missouri, Oklahoma, Tennessee, Vermont, and Washington.

Importantly for IT contractors, the bill creates three impediments to business with government entities. First, according to the bill, companies that do business with the state (or a political subdivision within California) are prohibited from “providing material support” (read: contracting) for any federal agencies that collect electronic data on individuals. The scope of the prohibition is overly broad and would most likely cover any “material support,” meaning everything from data center operations to cloud computing to electronic data collection and anything in between.

Second, the proposal prohibits the obligation of state or local funding for a contract with a corporation that currently contracts with federal agencies collecting electronic data or metadata on individuals. If awarding contracts were deemed to be an activity that aids a corporation, then funding these contracts would be prohibited under the bill. Many California-based companies provide technology goods and analytic services vital to the provision of national and homeland security for U.S. citizens. If passed, the bill would unnecessarily jeopardize a company’s ability to compete for business with the state, its cities, and its counties.

The proposed restrictions would have significant negative consequences on companies in California doing business with the state that also perform work with these federal agencies. In the extreme, corporations would have to choose between either serving the federal government or serving state and local government agencies – a choice no company should have to face.

Finally, the state and local governments would be prohibited from providing “assistance to any … corporation while providing services to the federal government in the collection of electronic data.” This provision could be interpreted to prohibit assistance for activities such as promoting economic development or offering incentives to companies to operate in the state. The types of services or assistance covered include tax adjustments, deferrals or waivers, or assistance with development of local training curriculums to establish a viable workforce for these companies. Again, the ramification is that companies seeking to do business in the state could find a disincentive in this proposal.

ITAPS believes this bill has many negative implications and, as drafted, is a bad idea. The ramifications are counterproductive to the best interests of the state, its citizens, and the companies that invest in and hire Californians. We hope that California, and other states contemplating similar bills, will recognize the various flaws in this proposal and preserve the opportunity for business, economic development, and jobs in their states.